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Stop what you're doing. Get a line of credit.

Discussion in 'General Entrepreneur Discussion' started by AgainstAllOdds, Jun 25, 2018.

  1. AgainstAllOdds
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    AgainstAllOdds Legendary Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    At most banks, for $150 a year you can open up a business line of credit up to $100,000 without providing financials. All you need is a personal guarantee and good personal credit.

    Then, you have $100k sitting for you for whenever you need it.

    When you need it, you only pay interest on the amount you take out.

    Interest rates are around 7% -- depends on the industry risk and your personal credit score.

    Payback is 2% of the outstanding balance per month.

    Talk to your local business banker. Line up the capital before you need it. Get ready to scale.

    *Warning* Only take on debt when you know you can easily pay it back or need it for a "no-brainer". An example of this would be having customers lined up for your product/service and just taking on debt to service the order.
     
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  2. CPisHere
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    CPisHere Silver Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    Lines of Credit are great because if an opportunity comes up, it's incredibly accessible.

    That said, I did have to give financials for mine. And different people will get approved for different amounts based on their financials. Each bank probably has their own slight differences as well. Mine only wanted to start with a $25k LOC, then a few years later added an additional $50k.
     
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  3. Patrickg
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    Patrickg Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    That's great information.

    I opened two new credit cards for this reason because my business is booming but I need more inventory.

    Very timely so I will talk to the banker tomorrow. Thanks
     
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  4. Scot
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    Scot Ductus Exemplo Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Where are these magical banks?

    So far I’ve only found one bank willing entertain the idea of me applying for a Line. Every other bank, upon hearing I was less than 2 years old said no.
     
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  5. CareCPA
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    CareCPA Gold Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    I went local. I was buying real estate with no business history. The big banks said no, but the local bank loaned at great rates.
    Real estate may be different than inventory-based businesses, but worth a shot.
     
  6. Vigilante
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    Vigilante Legendary Contributor Staff Member Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    You look much older than that and you are very articulate
     
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  7. Scot
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    Scot Ductus Exemplo Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Yeah, with RE, they can secure the loan. If you default, they still have a juicy piece of real estate to liquidate.

    Leap years and such.

    Most banks have minimum 2 yrs in business from what I’ve seen.
     
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  8. CareCPA
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    CareCPA Gold Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    True, but it was still harder to find one then I expected.
    There may also be private money for businesses with no history. Higher interest, but could bridge you the two years until you can go to a "real" bank.
     
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  9. Rivoli
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    Rivoli Bronze Contributor FASTLANE INSIDER Speedway Pass

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    Where are you seeing this? I have 430k in open sales right now and basically everyone refused me except one place "BlueVine Capital" and I only got 60k with 6% interest....
     
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  10. ApparentHorizon
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    ApparentHorizon Gold Contributor Speedway Pass

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    New banks. Big or small corp, when they open up shop in a new area, they're clamoring to get the ball rolling. Better rates too.
     
  11. AgainstAllOdds
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    AgainstAllOdds Legendary Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    I went with PNC.

    Most of the banks want 3 years in business or more, which I'm guessing they check based on the LLC incorporation date.

    PNC.

    And a 6% rate for business is pretty good.
     
  12. Scot
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    Scot Ductus Exemplo Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Wait, so are you saying that PNC does or does not want to see 3 years in business?
     
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  13. IGP
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    IGP Gold Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass

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    Every time I login to my WellsFargo account, they prompt me for a 3.99% fixed rate and (free for the first year) line of credit up to 100K.

    Could be an option?
     
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  14. Ungodly
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    Ungodly Tom Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    LOC's are great to have just sitting around, both personal and business. I have a few now, but ideally want around $500k in accessible credit lines. I will have to do a little more shopping around.

    @AgainstAllOdds Thanks for the PNC suggestion, submitting an application now.

    Edit: Application in at PNC, went for the whole $100k. Should know something within 48 hours. Went ahead and hit every other bank in this one horse town I'm living in. Half of them didn't even know their bank offered a business line of credit. :rofl:

    I have one of those. Past the 1st year now, but it's fine. Even though WF is a sh*t company.
     
    Last edited: Jun 27, 2018
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  15. Scot
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    Damn, I’ll look at it then.

    Damn that’s ambitious. I wouldn’t mind that to handle inventory though.
     
  16. LittleWolfie
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    LittleWolfie Bronze Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    If you have customers lined up why wouldn't you just take pre orders to service the order?
     
  17. Scot
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    Scot Ductus Exemplo Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    For someone who’s admitted to not succeeding thus far in business, you’re talking a big game.

    Most of the successful players on here all have active lines of credit. They’re extremely valuable tools to use to have access to larger capital at lower interest rates.

    The pattern I’m seeing here is, you’re thinking small. Your intro was that you don’t want to be a millionaire. Yes, if all you’re shooting for is $4k in MRR, then you don’t need a LOC, investors, and can presell your digital product.

    But if you’re shooting for a $20m per year in revenue business that’s inventory heavy, the rules of the game change.

    You need to shift your perspective and realize that “business” is a broad landscape and your preconceived notions don’t apply to every single one.
     
  18. LittleWolfie
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    LittleWolfie Bronze Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    Sorry, if it sounded snarky.

    Your right, I don't have the skills or the knowledge that's why I'm asking. I want to know why the (succesfull) people who chose that path chose it over another.

    Okay, so sounds like not the process for me, but doesn't mean I can't learn from it right?

    So is this more helpful to a inventory heavy business, perhaps less useful for a high end Saas aiming at 20mil? Or more helpful for inventory?

    What better way to change your mindset, than asking questions?
     
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  19. Patrickg
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    Patrickg Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    Plus certain business like mine people don't preorder. I'm not selling the next coolest video game. I'm in a very need based business and if someone needs it they can't wait.

    Just one scenario.
     
  20. Scot
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    Scot Ductus Exemplo Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    Lines of credit work really well on businesses that have a lot of acounts receivable. My business for example, I have to run production on inventory, then ship to customer and invoice them, wait 30-45 days to be paid. So, I usually got a 60 day cycle between having to buy the product and getting paid for it.

    A lot of industries don’t work on preorders. In almost every consumer packaged good market, you’d be laughed out of the meeting if you asked for upfront payment, let alone preorders.

    If we’re talking about a Saas product or any other digital product, you can probably get away with using preorders to start the ball rolling.

    I think the problem is that we see things like Kickstarter. People preorder sometimes up to 7 figures of product. That’s a great way to get started. But what we don’t see if the next few years of that business. In order to continue running products they need more funding.

    Looking at my business again. When I’m running at peak efficiency, I’ll be turning a 30% margin. That’s industry standard for me. But at my lower scale, I’m turning 5-10% margin. If I kept going slow and steady, only operating off my profit, it would take me a couple years to get to a bigger order size. And this is assuming I never had any expenses.

    The best thing you can do when evaluating the potential need is plotting out what your business looks like over the next 5 years. It’s important to know what the cash flow structure will look like.
     
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  21. LittleWolfie
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    LittleWolfie Bronze Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass

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    I'm thinking of thinks like online retailers with their Just-in-time which is almost dropshiooing too. Customer buys product, then it gets purchased, sold and transhipped.
     
  22. IGP
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    If you are drop shipping, fine no problem. But even in an e-commerce business (self-fulfilled) like mine where I send $30K+ to china every month to buy inventory you need credit. I have an Amex platinum and an Amex Gold card to handle my float with an unlimited line of credit. (I say that because they don't tell you a limit).

    What happens when Q4 rolls around and I want to be prepared for BFCM? Now I need to order $100K worth of product if I really want to smash Q4.

    What if Amex decides that I am only worthy of 50K? Now, I'm screwed. And keep in mind I am small potatoes!

    You don't understand because you are not speaking from experience.
     
  23. Flybye
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    Ive considered a LOC, but am really scared to borrow money for a business I just opened up to start with debt. Let alone the fact most banks want to see you in business for a few years. My problem was I had several expensive family issues come up which ate into my startup fund. As a result I have been forced to sell a lot of things around the house to try to compensate.
     
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  24. Rivoli
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    Anyone know any banks in Southern California that do lines of credit for businesses less than 2 years?
     
  25. G-Man
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    This

    If the business age is a roadblock, why not open a perosnal line. BBVA and Regions send me pre-approval for personal lines up to 50k probably twice a month. Since with a small business you're going to have to pg everything anyway, what's the difference.

    Also, if you're not keeping at least 5-10 credit cards open and requesting line increases every 6 months, you're doing credit wrong :clench:
     

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